Business Cycle Index shows improvement in West Bank, decline in Gaza 

PNN/ Ramallah/

The PMA has released the results of its extended Business Cycle Index (extended PMABCI) for August 2018. The results revealed that the overall index improved slightly during August due to the pickup in the West Bank’s index, and despite the decline in Gazan’s index. As such, the overall extended PMABCI increased from its lowest this year (-4.9 points in July) to around -3.8 points in August. Moreover, it remained higher than the index of August 2017 (-12.1 points)

In the WB, the increase in the trade index between July and August (from -0.3 to 2.5 points) pulled the WB’s index up from 4.4 points to 7.3 points. This is in addition to the improvement in the industry index (from 1.8 to 2.7 points), and to a lower degree, in the transport and storage index (from 0.2 to 0.3 points). From the other side, the agriculture index fell from 2.7 to 1.8 points. Meanwhile, indices of IT and communication, renewable energy and construction have all relatively stabilized.

Overall, the rise in the West Bank’s index reflected higher production during August, despite the relatively stable sales, and along with better future expectations about production in the coming three months, as indicated by the economic firms’ owners.

Conversely, the volatile index in GS resumed declining during August, falling to -30.0 points compared to -26.9 points in July, driven by a decrease in the trade index (from            -18.0 to -20.6 point), followed by a reduction in the agriculture index (from -1.0 to -2.0 points). Nonetheless, the construction and the industry indices relatively grew, from -2.1 to -1.6 points for the former, and from -4.8 to -4.7 points for the latter. At the same time, indices of renewable energy, and communication and IT have both failed to register significant changes, while the transport and storage index maintained its previous level.

It is worth noting that the Gazan index register mostly negative values, which reflects the adverse long-lasting political and economic conditions in the Strip, the continued Israeli siege, and the prolonged delays in reconstruction efforts. Moreover, production and sales levels slipped during this month as indicated by Gazan firms’ owners. They also showed pessimistic future expectations about production and employment in the coming three months.

It is noteworthy that the extended PMABCI is a monthly index, which aims at capturing the state and evolution of economic activity in Palestine by tracking sectoral performance (especially fluctuations in production and employment levels). The maximum value of the index is positive 100 points, while the minimum is minus 100 points; a positive value indicates favorable economic performance, while a negative value indicates bad performance. On the other hand, a value close to zero indicates that economic performance did not change and is unlikely to do so in the near future.

Extended PMA Business Cycle Indicator

Source: PMA (2018). Extended PMABCI, August 2018.